Cooperation for Innovation and its impact on Technological and Non-technological Innovations: Empirical Evidence for Western Ethiopian Manufacturing SMEs

Abstract

We advance the notion that cooperation for innovation can demonstrate beneficial effects on firms’ innovation performance. Whilst most empirical studies to date have focused on the impact of cooperation on technological product and process innovations, this study adopts a broader definition of innovation that encompasses both technological innovations and non-technological organizational and marketing innovations taking into account their complementary and interrelated nature. Drawing on a unique sample of traditional manufacturing small and medium-sized enterprises (SMEs) in three zones, the study shows that cooperation for innovation increases firms’ innovativeness. This conclusion is based on the positive association across the breadth of cooperation, i.e. the number of cooperative ties, with each measure of innovation outcomes, without exhibiting diminishing returns. In addition, empirical evidence suggests heterogeneous effects of individual cooperative ties on innovation performance. Overall, the results indicate that a portfolio approach to cooperation for innovation enhances innovation performance in traditional manufacturing SMEs. Finally, the findings confirm the complementary nature of technological and non-technological innovations.