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This paper investigates two sets of hypotheses related to the relationship between the investment in the knowledge-based economy (KBE) and innovation performance in a developing country. The first set supposes that investment in information and communication technologies (ICT), organizational innovations, and human capital, the main three pillars of KBE, has a direct effect on innovation performance of Tunisian firms. The second set tests the hypothesis of complementary effect of these pillars such that their combination constitutes a significant production system affecting the innovation performance. Using recent firm-level data, we find evidence of direct effect of investment in the KBE on firm's innovation performance. The second set of hypotheses is partly supported. We find evidence of complementarity between ICT and human capital as well as between ICT and organizational innovations, but we do not find evidence of complementarity between human capital and organizational innovations. Moreover, we find that full complementarity between ICT, organizational innovations, and human capital does not apply to Tunisian firms.

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This study aims to examine the ability of Tunisian manufacturing firms to invest in innovation activities and to transform these investments on innovation outputs and if these outputs have contributed to productivity improvements. It explores the relationship between research and development (R&D), information, and communication technology (ICT) use, product and process innovations and productivity. The study presents an application of the augmented Crépon-Duguet-Mairesse (CDM) model for 238 manufacturing firms in Tunisia. Results show thatR&D is an important predictor for product innovation, but not for process innovation. The use of ICT has a positive impact on both innovation types, but this impact is more important for the case of process innovation. Furthermore, the study shows the possible existence of a complementary relationship between R&D and ICT. The firms that combine R&D with ICT use increase their probability to introduce product and process innovation. R&D and ICT are also an important indirect driver of firm productivity through innovation activities. Thus, the results show a positive impact of product innovation on firm-level productivity. However, process innovation has a significant impact only if it is combined with product innovation. The study also identifies guidelines for development actors to better