Institutions, resources and innovation in east Africa: a firm level approach

Abstract

This study examines how firm-level resources interact with regional institutional quality to explain innovation in East Africa. We hypothesize that the institutional environment within which the firm operates moderates the effect of firm-level resources on innovative output. We examine the moderating role of institutions with regards to the transformation of firm-level resources including internal research and development, human capital and managerial experience into innovative output using firm-level data from the World Bank Enterprise Survey and the Innovation Follow-up Survey for three countries in East Africa including Kenya, Tanzania and Uganda. We test our hypotheses using a clustered robust standard errors logistic model. We find that the effects of firm-level resources vary depending on the institutional environment and that regional institutional quality positively moderates the effects of the firm-level resources.