Abstract:
This study investigates the impact of firm-level research and
innovation on the productivity of Sub-Saharan African firms in
2014–2018. This study utilizes World Bank Enterprise Surveys on
2,867 manufacturing and service firms conducted in SSA in 2018/
19. Endogenous Switching Regression (ESR) was used as the
primary estimation methodology. The results indicated that
Research and Development spending positively and significantly
impacts manufacturing firms’ productivity. In addition, service
innovation has a positive and significant effect on the
productivity of service firms. In contrast, product innovation is
insignificant to manufacturing firms’ productivity. Lastly, process
innovation is significant only to the manufacturing firms and not
the service firms. These results suggest that Sub-Saharan African
firms did not realize maximum innovation productivity gains
during the study period. Nonetheless, the results imply that other
than the conventional factor-driven production, Sub-Saharan
African firms have the potential to drive their productivity
through semi-endogenous firm-level innovation.
