A Complementary Relationship between Networks and Organizational Innovation Activities: Evidence from Chile

Abstract

The purpose of this study is to investigate the complementary relationship between networks and organizational innovation (OI) activities. This empirical study uses mainly probit and OLS estimation methods on 1760 Chilean SMEs. The regression analysis reveals that market- related networks (with customers, suppliers and competitors) positively influence the SMEs OI performance. Moreover, a complementary relationship between market-related networks and OI is found. This indicates that market-related networks and OI are economic activities that are highly interrelated and significantly improve the SMEs performance. Overall, the findings suggest that Chilean SMEs are engaged in market-related networks than through networks with technological institutions for improving OI and productivity performance. This indicates that higher cost of innovation; skills shortage and lack of access to credit reduce OI and productivity performance. The policy implications of this empirical study are that Chilean SMEs need to develop strong linkages to market-related agents (e.g., customers, suppliers) and with technological institutions (e.g., universities) for higher OI and productivity performance.JEL Codes: JELO3