THE EFFECTS OF PROCESS INNOVATION’S DIMENSION INTO PRODUCT INNOVATION – A COMPARATIVE FIRM LEVEL ANALYSIS FROM EU AND NON-EU COUNTRIES
THE EFFECTS OF PROCESS INNOVATION’S DIMENSION INTO PRODUCT INNOVATION – A COMPARATIVE FIRM LEVEL ANALYSIS FROM EU AND NON-EU COUNTRIES

Author(s): Brunilda Kosta, Nertila Busho
Subject(s): Economy, Public Finances, Socio-Economic Research
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: product innovation;process innovation;manufacturing methods innovation;logistic innovation; supporting activities innovation;
Summary/Abstract: This article evaluates the effect of process innovation’s dimensions (new production methods, new logistics and distribution, new supporting activities) into the product innovation, considering a comparable pattern between EU and non-EU countries. To examine this cause-effect chain, 516 interviews with innovative firms, randomly selected using stratified random sampling method, are reported. The sample comprised two sub-samples: four EU countries (Italy, Greece, Slovenia, and Croatia) and four non-EU countries (Albania, Bosnia and Herzegovina, Montenegro and Serbia). The logistic regression analysis reveals a positive association between new or significantly improved methods of manufacturing and product innovation and this causativeness effect is stronger among firms in the EU countries. When it comes to the other process innovation dimensions (new logistics and distribution, new supporting activities), the analysis uncovers no significant association for both sub-samples. Analysing the control variables (firm size, export orientation and governmental support), firm size is not significantly associated with the product innovation. However, export orientation has a significant positive effect on firm’s inclination to engage in product innovation. Similarly, government financial support via tax credits or deductions, grants, subsidised loans, and loan guarantees, has a significant effect on product innovation.

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