The Effects of Innovation Activities and Size on Technological Innovation in South American Manufacturing Firms

The process innovation approach is applied in an exploratory research using data gathered from the World Bank Enterprises Survey (WBES). Using probit models on a sample of 1,965 manufacturing firms from seven South American countries, the effects of innovation activities on product and process innovation are determined. Findings indicate that there is a positive relationship. However, these relationships can be different depending on the type of innovation and the size of the firm. We found that most of these activities are related more to product innovation than process innovation, and these relationships have greater statistical significance in SMEs than large companies. Lastly, given the positive effect on these relationships, we conclude by highlighting the importance of managers crafting their innovation portfolios properly and the need for further research to determine the innovative behaviour of manufacturing companies in the context of their respective developing country.