Innovation and economic crisis in transition economies

Abstract

Based on Schumpeterian theoretical considerations, this paper investigates the innovation behavior of firms during the severe economic crisis of the year 2008/2009. It focuses on transition countries of Central and Eastern Europe and Central Asia, which have completely restructured their innovation systems through the course of transition from planned to market economies a relatively short time ago. As a result of the crisis, we observe a strong decline of innovation activity in all transition economies. In line with the literature, there is, however, empirical evidence for both creative destruction as well as creative accumulation. This underlines two key findings: firstly, the universality and durability of Schumpeterian assumptions, and secondly, a call for anti-cyclical innovation policy.

Geopolitical hostility and corporate innovation: Evidence from US high‐tech firms in trade sectors with China

“…Moreover, the study contributes to the literature on international trade and global production whereby recognizing the role of trade relations as an important channel for the impact of escalated tensions between nations. The influential factors moderating the documented relationship are in support of the conventional theory of innovation during crisis (e.g., Archibugi et al, 2013a, 2013b; Friz & Günther, 2021; Kanerva & Hollanders, 2009). Furthermore, utilizing a longitudinal sample covering major events that escalate US‐China conflicts and disputes, this paper complements the extant studies on US‐China tensions and the greater literature on geopolitical shocks through clearly identifying the firm‐level transmission of the aggregate economic effects of political hostility and policy uncertainty (e.g., Baker et al, 2016; Rogers et al, 2021).…”

“…Following the extant literature (e.g., Friz & Günther, 2021; Pellegrino & Piva, 2020), I construct proxies to gauge the three moderators, namely, degree of establishment, financial flexibility, and size and human‐power capital, that moderate the negative relationship between innovation intensity and shocks of geopolitical and economic hostility. Specifically, I measure the degree to which the firm is established by firm age, FirmAge , which is defined as the number of years since it first shows up in Compustat database.…”

New challenges in European innovation partnerships. SOEs, POEs and foreign MNEs during crises

“…On the other hand, the analysis of cooperation during the 2008 crisis may be of interest since this arrangement constitutes a coping strategy that can be applied to deal with other uncertain environments (Sholec, 2015;Wang, 2021). While different types of crises affect rms in varying ways, the procyclical nature of innovation remains a consistent characteristic across diverse crisis scenarios (Archibugi et al, 2013;Brzozowski & Cucculelli, 2016;Busom & Vélez-Ospina, 2021;Friz & Günther, 2021;Geroski & Walters, 1995). This means that investment in innovative activities tends to decline during economic downturns and, conversely, increases during economic upturns.…”