Abstract
This paper applies the varieties of capitalism (VoC) theory of innovation to a country-case study: Germany. Drawing on a firm-level data set, the article measures the joint impact of a set of coordinated institutions—regarding the four institutional arenas highlighted by VoC—on incremental, radical, process innovation and imitations. Furthermore, to properly assess the effect of institutions, the probability to innovate is calculated across industries, export status and firm sizes. Evidence from logit modelling points to the crucial role of the selected group of institutions for all types of innovation, suggesting that the main road to innovation in Germany is a non-market corporate strategy, and that the VoC approach might be renewed.
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Source: IAB Establishment Panel, own calculations
Source: IAB Establishment Panel, own calculations
Source: IAB Establishment Panel, own calculations
Source: IAB Establishment Panel, own calculations
Source: IAB Establishment Panel, own calculations
Source: IAB Establishment Panel, own calculations
Source: IAB Establishment Panel, own calculations
Source: IAB Establishment Panel, own calculations
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Notes
In this example: \(P\left( {.ca\& wc = yes} \right) = \frac{{\left( {ca\& wc = yes} \right) \cap \left( {incremental = yes} \right)}}{ca\& wc = yes}\)
Predicted logits are converted into predicted probabilities assuming mean values of the explanatory variables and using the following equation: \(\Pr \left( {Innovation = 1} \right) = \frac{{e^{{L\left( {innovation = 1} \right)}} }}{{1 + e^{{L\left( {innovation = 1} \right)}} }}\).
Average marginal effects are the discrete change between two predicted probabilities.
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Funding
Daniel Herrero and Julián López Gallego would like to thank the Complutense University of Madrid and Santander Bank for their funding of pre-doctoral contracts for trainee research staff (CT17/17-CT18/17 and CT27/16-CT28/16, respectively).
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Herrero, D., López-Gallego, J. Revisiting varieties of capitalism: an empirical analysis of the institutional determinants of innovation in Germany. SN Bus Econ 2, 99 (2022). https://doi.org/10.1007/s43546-022-00257-8
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DOI: https://doi.org/10.1007/s43546-022-00257-8