Abstract
ABSTRACT This study investigates whether the impact of firm-specific capabilities on innovation performance depends on variance in the level of institutional development of transition economies. Since the development of institutions varies across transition economies, this research argues that the expected positive relationships of firm-specific capabilities (i.e., education level of workforce, managerial experience, access to external technologies, and export intensity) to new product introductions strengthen or weaken according to the level of institutional development of transition economies. Hypotheses are tested with survey data of over 9,942 firms in 33 industries from 26 transition countries. The results of this study suggest that the importance of education level of workforce drops for transition economy firms operating in less developed institutional environments whereas the importance of top manager experience, access to external knowledge, and firms’ export activities increase for firms operating in more developed institutional environments. Overall, the contribution of this research is to develop institution-based view and resource-based view explanations that are specific to transition economies. Both institutional environments and firm-specific capabilities need to be integrated to understand transition economy firms’ innovation success.
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