Obstacles and Drivers of Innovation Performance: Empirical Evidence from Colombian Firms in the Service Sector

Abstract

This article investigates the role of internal and external factors that drive or hinder the innovation performance of firms in the Colombian services sector. Based on firm-level data for 2018-2019 from the Survey of Development and Technological Innovation (EDIT), we estimated a Heckman selection model in two stages to moderate the potential selection bias caused by the firms' decisions to innovate. Then, a probabilistic ordered model with a selection equation was used to define innovative decisions and evaluate innovative performance. Two sets of variables measuring innovation capabilities, external linkages, and obstacles to innovative performance were considered. The results show that a lack of qualified personnel, uncertain demand for innovative goods and services, and lack of an intellectual property system to protect innovation hinder innovation performance. At the same time, other factors exhibit results that contradict the dynamic capabilities framework. The evidence suggests a negative correlation between unobserved factors that improve innovative performance and those that induce firms to innovate. This approach shows that although factors associated with public sector linkages play a role in inducing firms to innovate, they were overestimated in previous papers; therefore, those linkages were taken as significant to explain innovative performance.