TY - JOUR
T1 - Competition from Informal Firms and Product Innovation in EU Candidate Countries
T2 - A Bounded Rationality Approach
AU - Miocevic, Dario
AU - Arslanagić-Kalajdžić, Maja
AU - Kadic-Maglajlic, Selma
N1 - Published online: 28 July 2021.
PY - 2022/2
Y1 - 2022/2
N2 - This study extends the literature that has investigated firms' readiness to confront competition from informal (unregistered) firms by responding through intensified product innovation activities. Drawing on the bounded rationality perspective, we unravel new insights into the relationship between the threat from informal competitors and product innovation by identifying two external contingencies (intellectual property rights protection and regulatory quality) and two internal contingencies (export intensity and top manager's sector experience). In this way, the study acknowledges the immense differences that exist across developing markets, focusing on post-communist societies characterized with a medium level of economic development, limited market size, and weak institutional development. An empirical prototype of this type of context is exemplified in EU candidate countries. Therefore, our model estimates the effect of the threat from informal competitors on product innovation by testing firm-level data from five countries with EU candidate status. Our findings show that direct and positive relationship between the threat from informal competitors and product innovation is strengthened when: 1) intellectual property rights protection is weaker, 2) regulatory quality is higher, 3) the firm is an intesive exporter, and 4) the firm's top managers have less experience.
AB - This study extends the literature that has investigated firms' readiness to confront competition from informal (unregistered) firms by responding through intensified product innovation activities. Drawing on the bounded rationality perspective, we unravel new insights into the relationship between the threat from informal competitors and product innovation by identifying two external contingencies (intellectual property rights protection and regulatory quality) and two internal contingencies (export intensity and top manager's sector experience). In this way, the study acknowledges the immense differences that exist across developing markets, focusing on post-communist societies characterized with a medium level of economic development, limited market size, and weak institutional development. An empirical prototype of this type of context is exemplified in EU candidate countries. Therefore, our model estimates the effect of the threat from informal competitors on product innovation by testing firm-level data from five countries with EU candidate status. Our findings show that direct and positive relationship between the threat from informal competitors and product innovation is strengthened when: 1) intellectual property rights protection is weaker, 2) regulatory quality is higher, 3) the firm is an intesive exporter, and 4) the firm's top managers have less experience.
KW - Informal Competition
KW - Regulatory quality
KW - Rule of law
KW - Export intensity
KW - Top management experience
KW - Product innovation
KW - Informal competition
KW - Regulatory quality
KW - Rule of law
KW - Export intensity
KW - Top management experience
KW - Product innovation
U2 - 10.1016/j.technovation.2021.102365
DO - 10.1016/j.technovation.2021.102365
M3 - Journal article
SN - 0166-4972
VL - 110
JO - Technovation
JF - Technovation
M1 - 102365
ER -