Innovation Capacity, Business Sophistication and Macroeconomic Stability: Empirical Evidence From Oecd Countries

Abstract

The main aim of this study is to explore the linkages between innovation capacity, business sophistication, and macroeconomic stability within OECD countries. In order to obtain information regarding the relationship between time series variables, the Pedroni cointegration, Kao cointegration, fully modified ordinary least square, dynamic ordinary least square, Granger causality, and Dumitrescu Hurlin causality tests are employed. The empirical results reveal that improvement in business sophistication triggers innovation capacity and support macroeconomic stability. Innovation capacity would also need to be expanded in the long-run, which positively leads to advanced business sophistication that has a cyclical effect. If policymakers intend to accelerate business sophistication, then their attention should be directed towards maximizing the economic indicators in the long-run. To the best of our knowledge, the linkage between innovation capacity, business sophistication and macroeconomic stability in OECD countries has not been comprehensively explored through the use of a single dataset. Thus, the findings of this study could lead to a new debate regarding the concept.

The Determinants of Innovation Performance; An Income Based Cross-Country Comparative Analysis Using Global Innovation Index(GII)

“…In the current era of globalization, investing in a more knowledgeable workforce and management of this knowledge (Hassan & Raziq, 2019) gives businesses a competitive advantage in terms of innovation. According to Kirikkaleli & Ozun (2019), in innovation-driven economies, business sophistication and innovation are seen as the essential components of competitiveness.…”

“…Additionally, the interconnection of businesses with government and research institutions and customers have been termed as the most signi cant linkages that boost innovation (Ortega & Serna, 2020). A study by Kirikkaleli & Ozun (2019) found a positive link between business sophistication and innovation capacity in OECD countries.…”

The Impacts of Green Innovation Input and Channel Service in a Dual-Channel Value Chain

“…Kirikkaleli and Ozun [25] explored the linkages between innovation capacity, business sophistication, and macroeconomic stability within OECD (Organization for Economic Cooperation and Development) countries, and found innovation capacity positively leads to advanced business sophistication. Carlos et al [26] compared the innovation output indicators of Spanish knowledge-intensive service firms with those of other categories of non-knowledge-intensive service firms and manufacturing firms, found the main determinants of innovation output are the following: cooperation with other partners to innovate, R&D intensity, and the size of the firm. Wei and Chan [27] found the cooperative stability of China’s satellite industry military-civilian collaborative innovation was positively related to the cooperation revenue, liquidated damages, and government incentives, and negatively related to basic income, R&D costs, information communication costs, etc.…”

Sustainable business models for innovation and success: bibliometric analysis

“…Besides, the scientists in the papers [18][19][20][21][22][23] proved the linking between innovations, sustainable business model and country's competitiveness. The scientists in the papers [24][25][26][27][28][29] proved that sustainable business model could not be realised without innovations. The results of the analysis showed that the scientists analysed sustainable business model from the environmental, economic and social point of views.…”