Cooperation for innovation in liberal market economies: STI and DUI innovation modes in SMEs in the United Kingdom

This study focuses on the collaboration patterns that small firms hold with other agents within liberal market economies and identifies the collaborative drivers that in this context deliver a superior impact on innovation output measured by product and process innovations. To explore this research question, the study combines the literature on innovation systems with a growing literature on business innovation modes that studies whether businesses are driven by science and technology factors (STI), or experience-based factors such as learning-by-doing, by-using and by-interacting (DUI). In the UK liberal market economy, universities and research centres are expected to play a critical role for innovation well beyond the typical impact they produce in coordinated market economies. This hypothesis is largely verified through our empirical evidence. Methodologically, this research is developed through the application of propensity score matching in the context of the UK longitudinal small business survey (LSBS) for 2015.