Innovation inputs and efficiency: manufacturing firms in Sub-Saharan Africa

Laura Nelima Barasa · Patrick A.M. Vermeulen · Joris Knoben · Bethuel Kinyanjui Kinuthia · Peter Kiko Kimuyu

62 citations0/0 files storedEuropean Journal of Innovation Management

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Efficiency Analysis Using DEA Innovation and Knowledge Management Economic Growth and Productivity

Abstract

Purpose Countries in Africa have a common goal policy of industrialisation that is expected to be driven by investing in innovation that yields efficiency. The purpose of this paper is to investigate the technical efficiency effects arising from innovation inputs including internal R&D, human capital development (HCD), and foreign technology adoption in manufacturing firms in Africa. Design/methodology/approach This study uses cross-sectional firm-level survey data from the 2013 World Bank Enterprise Survey and the linked 2013 Innovation Follow-up Survey. A heteroscedastic half-normal stochastic frontier is used for analysing the technical efficiency effects of innovation inputs of 418 firms. Findings This study reveals that internal R&D, and foreign technology have negative effects on technical efficiency. Notwithstanding, the combination of foreign technology and internal R&D, and foreign technology and HCD reinforce each other’s effects on technical efficiency. Practical implications This study provides evidence that whereas individual innovation inputs may not yield positive efficiency outcomes, the combination of absorptive capacity enhancing inputs comprising internal R&D and HCD with foreign technology is vital for enhancing technical efficiency in manufacturing firms in Africa. This study offers important lessons for managers in manufacturing firms in Africa. Originality/value This study is virtually the first to investigate the relationship between innovation inputs and efficiency in Africa. This study demonstrates that investing in foreign technology in isolation from absorptive capacity enhancing innovation inputs diminishes efficiency. HCD and internal R&D are imperative for building absorptive capacity that enhances efficiency outcomes arising from foreign technology.

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References

1990Absorptive Capacity: A New Perspective on Learning and Innovation 1978Measuring the efficiency of decision making units 1977Formulation and estimation of stochastic frontier production function models 1989Innovation and Learning: The Two Faces of R & D 1977Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error 1998How does foreign direct investment affect economic growth?1995A model for technical inefficiency effects in a stochastic frontier production function for panel data 2000Stochastic Frontier Analysis

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