Macro Environment and Innovation in Service Sector. The Evidence from Albanian Context

Abstract

Innovation is considered as one of the best practices to achieve economic growth as well as overcome socio-economic challenges. It is an important factor to drive a better performance in a globalised economy. Recent studies have proven that innovations significantly contributes to the success and growth of a business. This paper aims to identify the connections between the various innovative practices with the macroeconomy in the services sector in a developing economy. The study will specifically focus on the Albanian services sector including banking and telecommunication. The methodology used combines primary and secondary data together. Secondary data is retrieved from an extended literature review on management and innovation which has also served as a basis for the hypothesis of this study. Meanwhile primary data is retrieved from the surveys distributed and completed by 170 companies in the banking and telecommunication sector. Results showed that government policy, financial resources and the cooperation between academics and the industry are not statistically significant to innovation practices in the developing Albanian economy. Whereas, market dynamics are not only statistically significant but also have a positive impact on innovation. Therefore by improving these external factors, innovation can also flourish further. Keywords: (innovation practices, services sector, macro-environment, Albania)