Open Innovation in Eastern Europe and Central Asia

Abstract

Innovation has been regarded as the crucial driving force for competitiveness. Recently, new approaches to innovation have transformed the innovation activities of firms. Open innovation, for instance, has emphasized the role of external partners in increasing innovation performance and competitiveness. In this analysis we link the implementation of open innovation practices to the competitive environment of the firm. We use a comprehensive firm level dataset for firms in 30 countries in Eastern Europe and Central Asia. We find that innovation activities are significantly affected by the competitive environment of the firm. The competitive intensity exerts an inverse u-shaped effect on innovation activities. For the implementation of open innovation practices we do not find significant effects exerted by the competitive environment. Rather, we see that it is international ownership linkages that facilitate the diffusion and implementation of open innovation practices in firms in Eastern Europe and Central Asia.