The Impact of a Crisis on the Innovation Systems in Europe: Evidence from the CIS10 Innovation Survey
Journal
European Review
Date Issued
2019
Author(s)
Stojkoski, Viktor
DOI
10.1017/S1062798719000218
Abstract
The varieties of the national innovation systems among European countries are
reflected in the large differences, discrepancies and sometimes unexpected results in
the innovation processes and their influence on labor productivity growth. The goal
of this paper is to find the differences between the drivers of the innovation systems
and their influence on growth of productivity between two groups of countries with
different institutional settings in the period of the financial and economic crisis in
Europe. The first group consists of a selection of CEE (Central and East
European) countries. The second group consists of Germany, Norway, Spain and
Portugal. In order to measure the role of innovation on productivity growth we
use the CDM (Crépon, Duguet and Mairesse) model of simultaneous equations.
The model directly links R&D engagement and intensity to innovation outcomes mea-
sured either as process or product innovation, and then estimates the effectiveness of
the innovative effort leading to productivity gains. The company-level dataset is drawn
from the Community Innovation Survey (CIS10). There is one common result for the
two groups, that in general the probability for a typical firm to engage in innovation
increases with its size. The other factors influencing the decision process differ. A firm
’s productivity increases significantly with innovation output, but only with firms oper-
ating in Western Europe. The results for firms in Central and Eastern Europe indicate
that these countries’ national innovation systems are vulnerable, and in periods of cri-
ses higher level of innovation output leads to lower labor productivity. Therefore, sys-
temic faults in the national innovation systems result in their unsustainability,
especially visible in periods of crises, as was the case in 2008
–
2010. When it comes to Western European countries, the financial and economic crisis did not have negative effects on their innovation systems as innovation activity resulted in higher levels
of labor productivity. Regarding the CEE group of countries, the crisis influenced both
the innovation process and labor productivity as a whole negatively.
reflected in the large differences, discrepancies and sometimes unexpected results in
the innovation processes and their influence on labor productivity growth. The goal
of this paper is to find the differences between the drivers of the innovation systems
and their influence on growth of productivity between two groups of countries with
different institutional settings in the period of the financial and economic crisis in
Europe. The first group consists of a selection of CEE (Central and East
European) countries. The second group consists of Germany, Norway, Spain and
Portugal. In order to measure the role of innovation on productivity growth we
use the CDM (Crépon, Duguet and Mairesse) model of simultaneous equations.
The model directly links R&D engagement and intensity to innovation outcomes mea-
sured either as process or product innovation, and then estimates the effectiveness of
the innovative effort leading to productivity gains. The company-level dataset is drawn
from the Community Innovation Survey (CIS10). There is one common result for the
two groups, that in general the probability for a typical firm to engage in innovation
increases with its size. The other factors influencing the decision process differ. A firm
’s productivity increases significantly with innovation output, but only with firms oper-
ating in Western Europe. The results for firms in Central and Eastern Europe indicate
that these countries’ national innovation systems are vulnerable, and in periods of cri-
ses higher level of innovation output leads to lower labor productivity. Therefore, sys-
temic faults in the national innovation systems result in their unsustainability,
especially visible in periods of crises, as was the case in 2008
–
2010. When it comes to Western European countries, the financial and economic crisis did not have negative effects on their innovation systems as innovation activity resulted in higher levels
of labor productivity. Regarding the CEE group of countries, the crisis influenced both
the innovation process and labor productivity as a whole negatively.
Subjects