Money talks? Obstacles to innovation in the Colombian manufacturing sector

Abstract

Background and objectives: Around the world, innovation has become a central issue on the agenda of policymakers given that innovation activities are critical as a generator of competitiveness. This work adds to the literature on the elements that hinder firms’ ability to innovate. Therefore, this work analyzes the relationship between innovation propensity and innovation barriers in the Colombian manufacturing sector.
 Methods: This relationship was estimated through a Probit model using cross-sectional data provided by the National Administrative Department of Statistics (DANE). In addition, we performed the correction of the sample selection bias present in many studies on barriers to innovation as proposed in recent literature (Pellegrino and Savona, 2017). Explanatory variables were included to understand firms’ characteristics, such as firms’ size, technological intensity of the industries, among others.
 Findings: Among the relevant results is that obstacles to innovation have negative effects on innovation. More precisely, financial barriers have the greatest effect on the firms’ propensity to innovate, followed by explanatory variables, such as firms’ size, expenditures on innovation activities, and their technological intensity.
 Conclusion: We test the effect of potential innovators’ perception of the importance of diverse obstacles to innovation on their ability to produce innovative goods (or services). More precisely, we tested the assumption of non-financial and financial barriers affected firms’ innovation propensity.  We found evidence of our main conjecture that financial related barriers are the most relevant and important obstacle for innovation.