Commonalities of standards certification and research and development as enablers of firms’ sustainable innovation and technological progress

Abstract

Adoption of international standards and investment in research and development (R&D), can be seen as two possible paths to support enterprises’ sustainable innovation and technological progress. This study argues that some aspects of R&D investment and certification to international standards are connected by identifying common factors that influence standards certification and business investment in R&D and examining the potential associations between the two. First, we examine the relationship between standards certification and R&D investments in European firms and identify enterprise characteristics that potentially affect each of the two concerns, focusing on differences and similarities. The analysis uses data from the World Bank Enterprise Surveys collected in 2018 and 2019 in selected European countries. We analyse the share and characteristics of firms that applied international standards and R&D expenditures. The probit regression results reveal a positive correlation between R&D expenditures and certification. Other factors affecting the probability of certification include size, export focus and industry. Bivariate probit regression allows us to identify common factors affecting both R&D expenditures and certification, showing significant variations between different forms of entrepreneurship. Subsidiaries of larger companies have a greater chance of being certified and investing in R&D. In contrast, sole proprietorships are significantly less active in both cases. Mentioned factors affects firms’ capabilities to develop sustainable innovation and adopt new sustainable technologies.