The effect of external knowledge on innovation capacity of SMES: Does the source of knowledge matter?

Abstract

This paper aims to analyze the effects of different sources of external knowledge (market sources, institutional sources and business network affiliation) on firms’ capacity to innovate. Using cross-sectional data collected with the help of questionnaires on a sample of 514 SMEs in 2014, we employ the maximum likelihood method to estimate logistic regression models from which follow three main results: firstly, market sources significantly reduce innovative capacity; secondly, institutional sources of knowledge significantly increase innovative capacity; and thirdly, the net effect of business network affiliation, taking into account the other two sources of knowledge, is quite small. Thus, these results show that the institutional and operating environment of SMEs needs to be improved in order to discourage opportunistic behaviours and reduce information asymmetries in the hope that, in the long run, market sources can be transformed into an advantage for innovation, on the one hand. On the other hand, there is a need for a broad national coordination policy that encourages collaboration between universities and industry, as well as the commercialization of university research results. Hence, these results enrich the current understanding of the link between collaborative networks and the innovation performance of firms.

Keywords:

• innovation
• R&D
• externality
• external sources of knowledge
• knowledge transfer
• SMEs

Acknowledgements

We thank the Editor-in-Chief of the African Journal of Science, Technology, Innovation and Development and the anonymous referees for their relevant comments and suggestions.

This article is taken from a chapter of the doctoral thesis of one of the co-authors under the supervision of the corresponding author. We would like to thank Professor Chameni Nembua Célestin, one of the doctoral thesis co-supervisors, for his wise advice. It is also an opportunity to thank the members of the Research Unit in Economics and Management (CREG) of the Faculty of Economics and Management of the University of Dschang for their proofreading and useful comments.

The data used in this article were collected as part of the International Development Research Centre (IDRC) project N° 107233-107003: analysis of the determinants of the performance of companies in French-speaking sub-Saharan Africa: Cases of Cameroon, Ivory Coast and Senegal. The study report is available online at the following address: https://idl-bnc-idrc.dspacedirect.org/handle/10625/54333

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 80.31% of the 640 companies in the database used are SMEs. This percentage represents 514 SMEs. Given that SMEs play an important role in the growth process and unemployment mitigation, it seemed interesting to us to focus on these companies since a substantial improvement in their capacity for innovation will necessarily lead to better benefits for the entire economy.

Additional information

Funding

The authors reported there is no funding associated with the work featured in this article.