Creative destruction and creative accumulation strategies in transition countries: are there complementary effects on firms’ productivity?

Abstract

ABSTRACT This paper analyse the innovation strategies followed by firms in transition countries between 1999 and 2014. During this period, institutional changes related to pro-competition reforms have changed the matrix of incentives that firms face. We shed new light on the correlation between the pressure of competition with firms’ innovation strategies in transition countries by analysing complementarity between creative destruction and creative accumulation strategies on firms’ productivity. Using econometric technics for panel data, our results show negative effects of competitive pressure on creative destruction strategy, and no effects on creative accumulation. Moreover, a positive complementary effect of these strategies on firms’ productivity is observed. Rather than homogeneous market-driven innovation strategies, an uneven learning path with specific combinations of creative destruction and accumulation under different competitive regimes seems to emerge. These results allow us to suggest a policy mix that articulates stimulus to innovative persistence associated with competitive capacity of the firms and incentives to cooperation between firms, in order to make the most of the complementary effects of different innovative strategies.