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Fostering Technology Absorption in Southern African Enterprises
low-tech sectors than in the high-tech sectors. They explicitly treat R&D as endogenous and account for the selection of R&D-performing firms. They argue that common causal factors of R&D and innovation do not bias their R&D coefficient estimates, to the extent that the explanatory variables in the R&D equation are indeed exogenous. Further, Garcia and Mohnen (2010) quantify the effect of public support for innovation on innovation inputs and outputs in Austria.
Empirical Analysis The analysis characterizes the relationship between a firm’s probabilities of introducing any of the six dimensions of technology absorption (listed below) and the underlying determinants of absorption outcomes, by estimating a technology absorption production function as shown below: Technology Absorption = f (K, L, OPEN, IP, R&D, HC, IC, PS), where K is access to finance; L represents firm employment; OPEN represents the openness of the firm to international trade and knowledge from abroad; IP is the ownership of intellectual property (patents and know-how); R&D refers to whether the firm conducts research and development; HC refers to human capital; IC is a catchall variable for the investment climate; and PS is public support for technology absorption. In this formulation, the determinants can be seen as inputs into this production function. All regressions control for the firm’s sector and size as measured by total employment. The following dimensions of technology absorption in a firm are used: 1. Introduction of a new product.21 2. Introduction of a new process. 3. Introduction of new knowledge management systems, a new organizational system, or a new management structure (hence “organizational change”). 4. Changes to the design of packaging, sales, or distribution systems (hence “marketing change”). 5. Investment in R&D. It is also used as a dependent variable to approximate the output of technology absorption (see further explanation below). 6. New to the market versus new to the firm (see definitions below). To identify the determinants of technology absorption, the econometric analyses estimated correlations (using multivariate regressions) between the above-mentioned six measures of technology absorption and a variety