Economic inequality and the purchasing power of a country as predictors of the level of business innovation

Abstract

Objective of the study: The general objective of this study is to establish the relationship between the economic inequality of a country, the purchasing power of its inhabitants and the level of innovation in companies Methodology/approach: A factorial analysis was carried out with the countries that had the three indices simultaneously. Likely, a structural equation model was used. Originality/Relevance: There is no consensus in the literature on the role of economic inequality in relation to innovation. Some studies present results that show that economic inequality can drive or even hamper innovation, while other studies explain the difficulties of development when there are economic gaps among citizens and low purchasing power. This study helps to understand this role and how innovation presents a model of structural equations that relates economic inequality, innovation and purchasing power of a country. Main results: People's purchasing power positively predicts a country's level of innovation and a nation's economic inequality negatively impacts the degree of innovation. Theoretical/methodological contributions: proposal for a model that relates economic inequality, business innovation and purchasing power of a country Social /management contributions: the study of macroeconomic factors and their relationship with innovation allow marketing to have a vision that leads to the construction of penetration strategies and respond to specific needs in order to increase the sales success of a given product.