To persist or not?: Determinants of product innovation persistence of Colombian manufacturing firms

• Published in: Management research (Armonk, N.Y.) N.Y.), 2019-09, Vol.18 (2), p.125-151
• Main Authors: Juliao-Rossi, Jorge, Schmutzler, Jana, Forero-Pineda, Clemente
• Format: Article
• Language: English
• Subjects: Developing countries; Innovations; LDCs; Market positioning; R&D; Research & development; Success; Technological change
• ISSN: 1536-5433; 1558-0946
• DOI: 10.1108/MRJIAM-11-2018-0887

PurposeThe purpose of this paper is to analyze the differential impact each of the dominant theoretical explanations has on innovation persistence. The authors hereby differentiate the degree of novelty, distinguishing between innovation based on invention (new products for the international market) and those based on imitation or adoption processes (new products for the company or new products in the national market).Design/methodology/approachPlacing this study in the context of a developing country, the authors apply an ordered probit model inflated in zeros (ZIOP). This methodology enables one to not only provide results not biased by the excess of zeros but also take into account the unobserved heterogeneity with respect to the sources of zeros (that is those firms which do not innovate). The empirical analysis is based on three Colombian innovation surveys carried out between 2003 and 2008 by the Colombian National Statistics Department.FindingsThe results provide empirical evidence that two elements are essential for both types of innovation persistence: accessing external financial resources and learning through interaction. Furthermore, the sunk R&D cost approach and technological learning explain persistence in innovation of new products for the international market.Research limitations/implicationsThe limitations of this study are directly related to the methodological choice. The authors were unable to take into consideration two sources of heterogeneity: the one related to initial conditions and the one related to the source of the many non-innovators. They opted to focus on the latter due the research question and setting of this study. Additionally, macroeconomic instability did not allow to consider a long panel; instead the authors had to rely on a short panel.Practical implicationsThe results provide important insights to managers. Continuous investments in innovation activities are important bot to become an innovative firm as well as to improve the odds of persistently innovating. Particularly, R&D investments are a pre-requisite for new-to-the-world innovations. Finally, it is not one specific set of capabilities which is a prerequisite for the generation of innovation; rather it is a strategic combination of various skills that increase the probability to (persistently) innovate.Social implicationsWith innovation persistence being especially relevant for long-run dynamics behind economic growth, the results of this study provide insig