Complementarities in R&D and Innovation Decisions: An Enquiry on an Extensive Sample of Latin American Companies

Abstract

This study uses an extensive sample of company data referring to seven Latin American countries to analyze the potential influence of simultaneity and heterogeneity in determining decisions to commit to R&D and innovation outputs. First, the analysis focuses on the decisions about spending on in-house and external research. Second, the outcomes of three different innovations: process, product, and organizational. Choices were considered simultaneously by employing a multivariate probit estimation model. In so doing, the enquiry considered the possible systematic interdependencies among the decisions. The results indicate that the two R&D decisions are interdependent. However, a different picture emerged in relation to innovation outputs, in which the correlations coefficients were small with unexpected signs. This may indicate a structural weakness of the technological production system in Latin America, wherein the synergies, complementarities, and complex relationships usually involved in the process of innovation are not fully developed.